Mikula Forecasting Company

MarketWarrior: Swing Projector Volatility Pattern

Here we are going to discuss a volatility pattern that is part of the Swing Projector. This pattern can help identify when the market is going to make a low volatility move in one direction. Markets have a tendency to move from a high volatility phase to a low volatility phase. On the chart below, we see a 1 minute bar chart for Apple Inc. and the Swing Projector has been added to this chart. On this chart I have identified the small swings that occurred between a large swing top and a large swing bottom. The small swing bottoms that were identified by the Swing Projector, are labeled 1, 2, 3, 4, and 5. The small swing tops identified by the Swing Projector, are also labeled 1, 2, 3, 4, and 5. All these small swings represent high volatility between the large swing top and the large swing bottom. When this occurs, there is a high probability the next large swing will contain no small swing pivots and will have low volatility. On the chart below, you can see the label "No Small Pivots". This identifies the low volatility swing that occurred just after the high volatility swing. This volatility pattern offers a trader the possibility of making a low volatility trade which moves constantly in one direction and therefore makes a very easy trade.